Friday, October 9, 2026

How to write an expense policy employees actually follow

Procapy Team

A sales manager takes a client team to dinner in Surabaya: four people at the table, Rp 2,350,000 on the bill. The expense policy, a fourteen-page PDF, says client meals should be “reasonable”, and their manager approves the claim the next morning. Three weeks later, finance rejects it. An appendix sets client meals at Rp 350,000 per person, so Rp 950,000 of the bill is over the limit.

The employee is out of pocket, the manager is embarrassed and finance looks like the problem. Next time, the employee either skips the dinner or splits the bill into two claims. The policy has failed in both directions.

An expense policy only works if people know the rules before they spend, and if every approver applies them the same way. This guide covers what goes into one, an example set of limits, a worked per diem calculation, how to write rules people follow and how to roll the policy out.

What is an expense policy?

An expense policy is the company’s written set of rules for what employees may spend on its behalf, how much, with what evidence, who approves it and how they get paid back. Many Indonesian companies call it the reimbursement policy.

It sits between two other things. Your approval matrix decides who signs off on a claim; the expense policy decides what that person is checking against. And your expense process is how the policy gets applied, claim by claim. A policy can be well written and still fail if the process never puts the rules in front of anyone.

What goes into an expense policy

A complete policy answers ten questions:

Who and what it covers. Employees, contractors and directors, and the principle behind it: the spend must be necessary for the business and backed by evidence.
Categories and limits. Travel, hotels, meals, client entertainment, local transport, mileage, phone and internet, training. Limits by grade and, where costs differ, by city or country.
Per diems and allowances. A fixed daily amount for meals and incidentals on business trips, instead of receipts for every coffee.
Evidence. Above what amount a receipt is required, what counts as a valid receipt and what to do when one is lost.
What is never reimbursed. Personal items, traffic fines, family members’ costs and upgrades nobody approved.
Who approves what. Usually the line manager, then finance above a threshold, as set out in the approval matrix.
Deadlines. How long employees have to submit a claim, and when the company pays it.
Cash advances and corporate cards. How an advance is requested and settled, and how card spend is evidenced.
Exceptions. How to ask for one before spending, and who can grant it.
Breaches. What happens when a claim breaks the rules, from a correction to a disciplinary matter.

An example set of limits

Limits are where policies are most often vague. Here’s an example by grade. The numbers are only illustrative; set your own from what your people actually spend:

Limit (Rp ’000)	Staff	Manager	Director
Hotel per night, Jakarta	900	1,400	2,200
Hotel per night, other cities	700	1,100	1,800
Per diem per day, domestic	250	350	500
Client meal per person	250	350	500
Receipt required above	100	100	100

A table like this does two jobs. Employees can check a limit before they book, and approvers stop deciding what “reasonable” means one claim at a time.

A worked example: per diem with partial days

Per diems save everyone from receipts for small meals, but only if the rules cover the awkward cases. Say the policy sets the manager rate at Rp 350,000 a day, pays half on a travel day that starts after noon or ends before noon, and deducts 30% when lunch is provided.

A manager flies to Makassar at 14:00 on Monday, attends a conference with lunch provided on Tuesday and lands back home at 11:00 on Wednesday:

Day	Rule	Amount
Monday, departs 14:00	Half day	Rp 175,000
Tuesday, lunch provided	Full day less 30%	Rp 245,000
Wednesday, returns 11:00	Half day	Rp 175,000
Total		Rp 595,000

Written this way, the employee, the approver and finance all reach Rp 595,000 without a conversation. Written as “a daily allowance applies to business travel”, each of them would reach a different number.

How to write rules people actually follow

Numbers, not adjectives. “Reasonable”, “appropriate” and “modest” are invitations to argue. “Up to Rp 350,000 per person” isn’t.
Warnings and blocks are different. Decide for each rule whether breaking it needs a justification (a soft rule) or is never allowed (a hard rule). A hotel Rp 50,000 over the limit during a conference week is a warning; a personal purchase is a block.
Say what to do instead. A rule about lost receipts should say what to submit in their place, such as a signed missing-receipt declaration up to a set amount, not just that receipts are required.
Design for the common claim. Taxis, parking, meals and hotels make up most claims. Make those quick to submit and easy to approve, and save the detail for the rare ones.
Ask for what the approver needs. For client meals, that means the attendees, their company and the business purpose, captured in the claim rather than in a follow-up email.
Make rejections explain themselves. A rejection should name the rule, what’s missing and what to change, so the employee learns the rule once.

Why expense policies fail in practice

Written once, never updated. Hotel rates in Jakarta have moved on since the limits were set, so every claim is over the limit and every one is approved anyway.
Hidden in a PDF. Employees find the rules when a claim comes back, not when they book.
Applied differently by each approver. One manager approves the dinner, another rejects the same dinner, and employees learn which manager to ask.
Exceptions agreed in chat. The director said yes on WhatsApp, and six months later nobody can show the auditor why the claim was paid.
Thresholds that invite splitting. A receipt or approval threshold with no check for split claims teaches people to submit two claims of Rp 90,000.
Approvers with no time to check. Forty claims, no receipts on screen and a meeting in five minutes means every claim is approved.

Expense policies in Indonesia

A few local points are worth writing into the policy itself:

Allowance or reimbursement matters for tax. How a payment is classified affects PPh 21. A fixed allowance paid regardless of spending is usually treated as part of the employee’s income, while reimbursing an actual business cost backed by a receipt usually isn’t. Per diems sit between the two, so agree their treatment with your tax adviser and state it in the policy.
Client entertainment needs a guest list. To deduct entertainment costs for corporate income tax, companies generally need a daftar nominatif: who was entertained and their position and company, plus the business purpose. Ask for those details in every client meal claim, not at year-end.
Faktur pajak for larger purchases. Everyday receipts, such as restaurant bills and taxis, rarely come with a faktur pajak. When employees buy something on the company’s behalf and you want to credit the input VAT (PPN masukan), the policy should ask for a faktur pajak in the company’s name and NPWP, not the employee’s.
Several PTs, several policies. In a group with more than one entity, decide which rules are group-wide and which differ by entity, and say so.

Signs your expense policy needs work

You probably need to look at your policy if any of these sound familiar:

It was last updated more than two years ago.
It uses words like “reasonable” or “appropriate” where a number should be.
Employees learn the rules when their claim is rejected.
Two approvers decide the same claim in different ways.
Exceptions are approved in chat, with no record on the claim.
Finance rejects claims that managers have already approved.
Claims just under the receipt threshold or an approval limit are suspiciously common.

A rule employees only meet when their claim is rejected isn’t a policy. It’s a penalty.

How to write, or rewrite, your expense policy

Start from your claims, not a template. Look at six to twelve months of claims: what people actually spend on, where the rejections and exceptions are and which limits nobody keeps to.
Replace every adjective with a number. Set limits by grade, and by city or country where costs differ.
Mark each rule soft or hard. Soft rules need a justification, hard rules can’t be overridden.
Use per diems where receipts add no control. Meals and incidentals on trips are the usual candidates. Write the partial-day and meals-provided rules from the start.
Write the evidence rules. The receipt threshold, the missing-receipt declaration and the details required for client meals.
Set deadlines in both directions. How long employees have to submit, and when finance pays.
Put the rules where people spend. A one-page summary helps, but the real fix is checking each claim against the policy when it’s submitted.
Review it every year. Update rates, check which rules generate the most exceptions and fix those first.

How Procapy helps

Capy Expense turns your policy document into rules that run on every claim before it’s submitted. Per-diem, meal and category limits, receipt thresholds and allowed merchants are configured once, by employee grade, entity or country. Soft rules produce a warning with the rule stated in plain language, and hard rules block the submission and say what to change. Per diem rates by country, city and grade are applied from the travel dates, with partial days and meals-provided deductions handled by the rules, so the employee enters the trip rather than the arithmetic.

Employees photograph a receipt in the Capy app and ProcAI reads the merchant, date, amount and tax. Duplicate receipts are caught across employees, reports and card feeds, and client meals require attendees and a purpose. ProcApprove routes each claim through your approval matrix, and approvers see the receipts and the policy result on the same screen. When a claim is rejected, it states the rule it failed and can be corrected in place.

Most teams are live in under two weeks. Book a walkthrough and bring your policy document, and we’ll show you how its limits are set up in Procapy. The employee experience page shows what changes for the people submitting them.

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